USDA announces loan rates for 2006-crop peanuts

USDA’s Commodity Credit Corporation (CCC) has announced 2006-crop loan rates for four types of peanuts. The announcement is a requirement of the Farm Security and Rural Investment Act of 2002.

CCC calculated the price support levels for each peanut type using the same method as last year. CCC uses the national average loan rate of $355 per ton and five- year average quality factors along with a three-year simple average weighted production.

The rates take effect Aug. 1, 2006, the beginning of the peanut crop year.

CCC computes the 2006-crop peanut loan levels and grades based on the type, quality and location of this year’s peanut crops. For an average-grade ton of 2006-crop peanuts, loan levels by type are: Runner-type peanuts, $355.43 per ton; Spanish-type peanuts, $343.61 per ton; Valencia-type peanuts, $354.86 per ton; and Virginia-type peanuts, $354.86 per ton.

CCC applies premiums and discounts for quality factors to compute the loan value for an individual ton of peanuts. The actual loan level depends on the percent of various sizes of kernels in each ton. CCC uses the percentage of sound mature kernels (SMK) and sound splits (SS) to compute the basic loan value of the load. SMKs are whole kernels that pass over the testing screen officially designated for each type of peanut. Sound splits are whole kernels split into two pieces. Excess sound splits receive discounts.

There are discounts for “other kernels: (OK), damaged kernels (DK), and foreign materials (FM). An additional discount occurs for loose shell kernels (LSK). Other quality discounts may also apply.

For each percent of SMK kernels, plus each percent of SS kernels in a ton of peanuts, the loan levels are: Runner-type peanuts, $4.815 per percent; Spanish-type peanuts, $4.791 per percent; Valencia-type peanuts, $5.196 per percent; and Virginia-type peanuts, $4.911 per percent.